Here's a bunch of long answers to short questions. Hey, this is great practice for the focus group...
wab said:
Nords, is that installed cost/KW? Those nifty new panels I linked to cost less than $5/W, and I vaguely recall you paying something like $4/W for your panels. Am I missing some hidden costs or is my memory just blown?
It's all in the marketing. The contractors quote a fixed price because they can work a heckuva lot faster with power tools & speed racks, but my time is worthless and I have plenty of it.
We bought our panels for $1.82/watt (1100 watts, early 1990s vintage, clueless local seller), $3.98/watt (1760 watts, 2005 factory rejects, Mainland shipping), and $4.17/watt (192 watts, late '90s, but a nice local guy). Part of our racks were used and we made the rest from leftover (free) scrap aluminum. We did all the mechanical labor. The inverter was full retail and the 1100-watt panel connections were done by the electricians, but we strung all the wires and grounded the system. When we bought the rest of the panels 10 months later we hooked them up on our own.
Add in the cost of the wiring, the PVC, the nuts & bolts, the U-Haul truck & gas for some panels plus eBay shipping for others, and the total materials cost was $13,106.
The electrician's labor was $862.50 plus another $561 to handle the permits, permit fees, & paperwork (which, considering our state bureaucracy, was money extremely well spent). So the grand total was $14,529.50, or about $4.84/watt ($4843/KW) installed to turn the switch. The biggest up-front costs are the inverter, the permits/fees, and the electrician. The incremental cost of adding additional panels to max out the first inverter, especially DIY, is very low. We've maxed out our inverter but if we decide to expand further I think I've learned enough to install our own second inverter and to do all the electrical work on our own. HECO and the state will never know the difference.
Back in late 2004 a good wholesale Hawaii PV panel price was $4/watt (just the panel, no installation). By late 2005 it was $6/watt, and earlier this year it was already up to $7/watt. (Hint: Buy stock in solar-panel companies.) Some of that cost is shipping (although these are statewide contractors who buy their panels by the truck containerload) but I guess it could be less on the Mainland. (There's a worldwide panel shortage now-- prices are being driven by U.S. tax subsidies as well as German & Japanese demand.) The guy who did our work, Keith Cronin of
Island Energy Solutions, has an
estimation spreadsheet that currently quotes about $24K for a similar system installed ($8K/KW), although I don't know how up-to-date the pricing is. A CA contractor may have a similar spreadsheet with Mainland prices. (Wab or Brat, you guys might enjoy saving the Island Energy spreadsheet, unprotecting it, and tinkering with it for CA prices.) I've seen $10K per KW (installed) quoted from our local
Inter-Island Solar Supply, but a system bigger than 3 KW would probably get a discount.
In the two tax years since we've shelled out that $14,529.50, we've taken $1377 in state tax credits (tax years 2004 & 2005). We have another $2507.50 of state credits carried forward as long as it takes us to use them (Hawaii is very easy on retiree taxes). This year was our first federal credit of $1631 (tax year 2005) and next year we'll take another credit of $2000 for tax year 2006. All of those credits will cut our net cost down to $7014, probably by 2009.
Let me point out that Hawaii's credits apply to the purchase-- we bought some PV equipment in Oct 2004 and more in Feb 2005 for two years of credits. The federal credits apply to the date of first operation, so we took a smaller credit in 2005 and we'll take a bigger one in 2006. Then we'll take more Hawaii credits on our 2006 purchase of solar water heating equipment. (I'm practicing this explanation so that I'm good at delivering it when the auditors drop by.) We didn't get any reimbursements from HECO but CA may offer state & local tax credits and the utility may offer reimbursements. I've heard that PG&E makes it very complicated-- worse than a cell-phone bill-- but it's heavily subsidized.
So after all the credits, our 3000-watt system cost $7014 or $2.34/watt ($2338/KW) installed.
I built a nasty spreadsheet measuring the payback against the opportunity cost of investing that money in a fund paying a 6% return after expenses & taxes. We started the calculations on 6 Oct 2004, the day we bought the first equipment, and every date that we spent money the cost was added to the spreadsheet to start compounding at 0.5% per month. Over the last 18 months of spending $14,529.50 it would have compounded to a total of $15,325.
Our spreadsheet savings are the tax credits and the power we've generated. They also compound at 6% so I take the credits when we file our returns and I read the inverter's power reading each month. I started the power savings at 15 cents/KWHr but I've boosted that to 21 cents/KWHr after HECO's latest prices. (HECO makes most of its power from oil. This variable pricing is making the spreadsheet a little more complicated than I'd like.) So far our savings (both credits & power) have compounded to $3380. Assuming that we take all the remaining credits by 2009, that we average 300 KWHr/month (not quite yet but summer's coming), and that generation costs stay at 21 cents/KWHr (ha!) we'll conservatively break even around late 2010.
Of course I'm making a straight-line approximation of a compounding parabolic curve and power-generation costs are expected to rise over the next four years, so the payback might even happen in 2009. I don't have a good feel for our average monthly power generation yet, and I just haven't run the spreadsheet out far enough to make the lines cross yet.
Heck, I haven't even hooked up a data cable from the inverter to our PC and used Xantrex's performance-monitoring software yet. When I get around to doing that you can watch our system generate power in real time on our website.
Just to complicate an already hypercomplex spreadsheet, we simultaneously built our solar water-heating system and started it up on 7 Feb 06 at a cost of $920 (again, mostly used equipment and all DIY labor). I didn't measure the power savings of our old electric water heater (although I could calculate an approximation) so I don't know how fast the solar water system is saving us money. I figure I'll combine its expenses with the photovoltaic spreadsheet for one massive cumulative compounding payback, so true solar freedom might not happen until 2010-2011.
Spreadsheet & data available upon request. Your mileage will vary.
